Gov’t: no transport hikes expected soon

President Cristina Fernández de Kirchner speaks at a rally in Olivos residence this week.

President Cristina Fernández de Kirchner renews defence of subsidy cut

While President Cristina Fernández de Kirchner yesterday once again defended her decision to cut gas and water state subsidies between 17 and 80 percent due to the creation of “millions of new jobs, better salaries... and for the sake of fairness,” Interior and Transport Minister Florencio Randazzo said that the government will continue subsidizing public transport and that as a result no train and bus fare hikes must be expected in the coming months.

The opposition meanwhile warned that the lower subsidies will affect salaries.

Writing in the Facebook social network the president said that in 2003 — when her late husband and predecessor Néstor Kirchner took office in the aftermath of Argentina’s worst-ever meltdown — subsidies were necessary as a large chunk of people’s salaries “went to dollarized public fees while their salaries were not dollarized. On the contrary, their savings had been pesofied during the corralito,” in reference to the banking restrictions imposed under the Radical-Frepaso Alliance administration of President Fernando de la Rúa, who quit mid-way through his four-year term in late 2001 amid bloody riots sparked by the economic crisis.

Fernández de Kirchner recalled that subsidies were adopted to foster social consumption and give the industrial and commercial sectors more competitiveness.

“But things have taken a turn for the better and millions of Argentines have got a job, millions of Argentines have seen their salaries improve,” she said.

The president added that the subsidy reduction is also a decision made for the sake of fairness. “Those who over the past decade have attained a better economic position can pay.” She recalled that some provinces such as Corrientes, Formosa, Chaco and Misiones and the north of Santa Fe province “still lack gas.”

On Thursday, when the subsidies reductions were announced, the Peronist president said that “this has nothing to do with a massive tariff hike.”

Randazzo on transport

Meanwhile, Randazzo said that the savings resulting from the utility subsidy cuts will be channeled for child benefit and welfare for destitute youths. He added that perhaps the reduction could have been decided earlier but that “the government considered that this was the right time.”

He also said that the administration will continue to subsidize 50 percent of train and bus fares.

Speaking to Radio Continental Randazzo said that in the first two months of the year subsidies in the metropolitan area were cut by 12 percent but “no bus or train fares hikes must be expected.

“Maintaining the subsidies is always a decision connected to the most vulnerable sector, the one using public transport,” he said.

Economy Minister Axel Kicillof said on Friday that the government will “continue to work to reallocate all subsidies.”

Opposition

National Deputy Sergio Massa, the leader of his dissident Peronist Renewal Front, demanded an increase in the salary taxation threshold (see page 4) alleging that the subsidies reduction will affect salaries’ purchasing power.

Massa is widely expected to challenge Fernández de Kirchner’s Victory Front in next year’s presidential vote. He served one year as Cabinet chief until the President fired him in July 2009.

Agreeing with Massa was Roberto Lavagna, who quit as Economist Minister under Kirchner in late 2005. Lavagna said that the subsidy cut will also affect power fares and that hence a tax cut should be adopted as a compensation.

Alfonso Prat Gay, a national deputy for the centrist Civic Coalition, said that the measures announced by the government are a “strong fare hike” in line with the “International Monetary Fund’s manual.” He served as Central Bank Chairman under Kirchner and quit in 2004.